The Competition Commission’s proposed franchise market inquiry may reveal weaknesses in South Africa’s franchise sector, particularly around contractual practices, unequal bargaining power and the information given to prospective franchisees. The greater challenge is already visible though, in that franchisees may have rights in law but many cannot afford to enforce them. The complaints identified in the Competition Commission’s draft terms of reference are familiar. They include allegations that some franchisors have failed to pass supplier discounts and rebates on to franchisees, imposed nonnegotiable pricing and promotional strategies, granted concessions inconsistently and presented prospective franchisees with misleading information or overstated projections. Some of this conduct may already fall within the protections of the Consumer Protection Act. A franchisee who believes a franchisor has acted unlawfully may lodge a complaint with the National Consumer Commission or pursue legal proceedings, though in practice that remedy can be difficult to use. Litigation is expensive, slow and disruptive, particularly for a franchisee whose business remains commercially tied to the franchisor. By the time a dispute reaches court the franchisee may have lost the business or no longer have the resources to continue the proceedings. A right that can only be enforced through years of litigation offers limited protection to the business owner (franchisee) who cannot sustain the process. The structure of franchising makes this especially important. Franchisors are entitled to protect the consistency of their business models and brands, but the relationship does not always involve equal commercial power. The franchisor often controls the brand, supply requirements and marketing approach for reasons that go beyond this commentary, while the franchisee carries the cost of establishing and operating its business. The inquiry should therefore look beyond whether particular practices restrict competition or disadvantage smaller and historically excluded participants. It should also consider how disputes arising from those practices can be resolved more quickly and affordably. Section 82 of the Consumer Protection Act already provides a possible route. It allows the minister, on the recommendation of the National Consumer Commission, to prescribe an industry code that may regulate relationships within a sector and provide for alternative dispute resolution. The question is why, more than 15 years after the Consumer Protection Act came into effect in 2011, a franchise-specific industry code has still not been finalised. A franchise-specific industry code, supported by an independent specialist forum, would give franchisors and franchisees a process designed around the commercial realities of their relationship. It could reduce the cost and delay of litigation, provide greater consistency in the treatment of recurring disputes and distinguish legitimate system controls from conduct that unfairly disadvantages franchisees. Responsible franchisors would also benefit from a process that resolves disputes before they damage the wider network. Franchising depends on consistency of the brand, goodwill and the long-term viability of individual franchise businesses, which means an accessible dispute resolution system would strengthen rather than weaken the model. The franchise market inquiry may diagnose the problems within the franchise sector. Its more valuable legacy would be a practical mechanism through which those problems can be resolved, and it needs to be established as soon as reasonably possible. • D’Amico is a consultant attorney at Thomson Wilks.